Chapter 06: Extra Problems Problem 1: Far North Telecom Far North Telecom Ltd., bas organized a new division to manufacture and sell specialty mobile phones. The division's monthly costs are shown: Manufacturing costs: Variable costs per unit Direct materials.... S48 Variable manufacturing overhead.... S2 Fixed manufacturing overhead costs (total)... $300,000 Selling and administrative costs: Variable... 12% of sales Fixed (total) S470,000 The company regards all of its workers as full-time employees and the company has a long. standing no layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labor costs in its fixed manufacturing overhead. The mobile phones sell for $150 each. During September the first month of operations, the following activity was recorded Units produced (Op)... 12.000 Units sold (OS) 10,000 Required: 1. Compute the unit product cost under a. Absorption costing. Variable costing 2. Prepare an absorption costing income statement for September 3. Prepare a variable costing income statement for September 4. Assume that the company must obtain additional financing to continue its operations. For this purpose which of the above statements would you prefer to rely on when meeting with prospective investors? 5. Reconcile the absorption costing and variable costing operating incomes in (2) and (3) above